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Will Novel Industry Consortium Result In Greater Sales of PGx Technologies?

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What’s the old saying about teaching a man to fish and you feed him for a lifetime? A novel biotech industry experiment hopes to leverage that maxim by showing universities how to do drug discovery and development.

If successful, this novel experiment might also help create a modest new market for pharmacogenomics technologies.

Spurred by a slumping biopharma investment climate, a California contract research organization has enlisted three top universities in the state to help them attain national and local funding, and to teach them how to perform pre-clinical and clinical trials in hopes of making their nascent drug-development programs attractive to pharmaceutical companies.

The program, called PharmaStart, might also become a mild boost to SNP-genotyping and gene-expression technology providers, whose platforms play a direct role in some early discovery and development trials.

“We’re hoping to leverage this network to get significant … funding that would not normally have existed, and we think we can do that,” said Glenn Rice, vice president of the bioscience division of SRI International, the CRO that created PharmaStart. “We expect that PharmaStart will catalyze the emergence of new collaborations, new drug development initiatives, and new funding sources” like philanthropic groups, he said.

The current down market and a dearth of venture-capital investment led SRI to create PharmaStart. During the late-1990s biotech heyday, academic drug-discovery researchers were more able to obtain private-equity cash, and later SBIR grants, to help spin out companies that would develop the discoveries made in their labs.

Additionally, pharmaceutical and biotechnology companies spent freely to invest in these discoveries, paying premiums on compounds that had been validated through pre-clinical and sometimes clinical trials conducted at these university spin-offs. Pharmas would also gladly pay for potentially promising compounds that hadn’t yet been validated.

Today, however, the VC well has run dry, and the biopharma sector has double-bolted its bank accounts — which are themselves in jeopardy courtesy of anorexic pipelines and investor malaise. So in a sense, PharmaStart was created to help re-ignite the entrepreneurial engine — money — that has helped academic researchers move their R&D tent downstream.

For its part, SRI would provide gratis 30 hours of consulting services to help the universities — Stanford, University of California at San Francisco and UC San Diego — bone up on lead development and optimization, cell line characterization and banking, manufacturing, toxicology, analyte methods, pharmacokinetics and ADME research, and biomarker assay development and validation.

Rice said he would also try to forge relationships directly with tool vendors to help outfit the academic centers with instruments they’d need to perform ADME-toxicology and validation research, and perhaps gene expression and genotyping studies.

“I think it’s part of the leverage of this consortium that we hope to see,” said Rice, referring to the likelihood that SRI will eventually recruit pharmacogenomics tool vendors into the PharmaStart consortium. “We all hope that that will be the case.”

To be sure, the amount of money the program will infuse into the tool pool is up in the air. Indeed PharmaStart, still in the early stages of development, has yet to help the California schools secure government funding. Skeptics, for example, quip that the program will do little to encourage greater investment in discovery technologies, saying that government funds directed at PharmaStart labs, which would come from a finite cash pool, will be diverted from other labs.

But this doesn’t mean that some tool vendors aren’t a little encouraged. “Sequenom would love to work with the consortium that comes out of this,” said Robin Jackman, the company’s vice president of corporate development. “It’s unclear how things will develop, but as they develop I’m sure they’ll find [technology vendor] partners that are interested in working with them.”

The consortium has also interested Golden Helix, a tiny start-up in Bozeman, Mont., which is developing software for pharmacogenomics data mining and compound selection. “Any increase in people doing genetics-type research is always a good thing” for the pharmacogenomics space, said founder Christophe Lambert.

Meantime, Kim Slocum, director of strategic planning and business development at AstraZeneca, said PharmaStart will likely encounter a new industry challenge as it tries to license compounds to big pharma: He said he’s noticed a trend in which pharmas have begun out-licensing their own compounds rather than licensing in others’.

“Right now, most of research-based pharma is set up to chase blockbusters for relatively low-acuity disease,” said Slocum. “Most of the other compounds they develop don’t have the firepower to make economic sense to big drug makers.” Orphan drugs, which will be a strong focus of PharmaStart, unfortunately exist in this category.

Follow the Money

SRI International isn’t doing this is wholly as a philanthropic exercise. The money it helps to secure for PharmaStart will eventually help defer the $15,000 it costs to perform 30 hours of consulting, Rice said. SRI also hopes that the PharmaStart centers will farm out to it some early-stage toxicology studies — which will also be paid for through state or national grants, private investment, or philanthropy.

In the end, however, it matters little which component of the PharmaStart family — the CRO or the academic centers — performs the actual research. What does matter is that such research will now be performed at all.

If it is successful, PharmaStart will likely have animated the entrepreneurial designs that many academic researchers harbor before the market has had the opportunity to do so naturally. But artificially grown growth is as good as natural growth to a biotech economy and pharmacogenomics-tool sector that has seen better days.

VCs and pharmas are holding onto their checkbooks for good reason: They know first hand the cost of validating a drug candidate and moving it through pre-clinical and early-stage clinical trials.

For example, Rice said SRI’s $15,000 fee will cover consulting services — not clinical services, mind you — for one compound. Not an exorbitant amount on its own, but most large universities can generate as many as 20 novel compounds each year.

Academic centers will also have to find money to develop the actual drug. According to Rice, bringing a typical small molecule from lead compound to IND costs between $2 million and $4 million and takes between 18 months to two years of work; a protein costs between $4 million and $6 million and takes as long as three years.

Rice said it’s unclear whether it will be easier for academic centers to obtain funding from the federal government to develop drugs compared with securing VC investment or a commitment letter from big pharma. The National Cancer Institute and the National Institute for Allergy and Infectious Disease, for example, “will pay for pre-clinical development of specific drugs,” said Rice, who added that some of the money can go toward acquiring instruments and consumables. “They’ll pay for the whole thing. You just have to apply for the grant.

“But you have to know how to propose to develop the drug,” he told SNPtech Reporter. “That’s where PharmaStart comes in. Many academicians don’t know how to write a drug-development grant. They don’t know what you have to do.”

The goal of this exercise, eventually, is to attract VC or pharma investment. And the nature of the process itself eliminated virtually all of the risk that has caused these investors to pull back on the reins. “It’s very helpful to investors, because now they know that some of the risk has been taken out,” said Rice. “Someone has carefully and rigorously thought through this development plan: What are the hurdles, what are milestones, what are the costs?”

Whether it succeeds or fails, PharmaStart has certainly created some buzz: Rice said SRI has received calls from 12 other states to expand the PharmaStart initiative.

In any event, the biotech market — which vendors alternately say is either flagging or holding up well — is brightening as private-equity investors begin to re-enter the fray, however tenuously.

— KL

 

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